State appraiser board’s poor miscalculation
Tribune Editorial
Arizona home buyers and property speculators are fortunate the state Board of Appraisers did something against their interests while the Legislature is still in session, so lawmakers can act immediately to put a stop to it.
The Board of Appraisers is going after Zillow.com, a year-old Web site that offers free estimates of market values for an estimated 70 million houses across the country. The state agency contends the site is offering property appraisals without an Arizona license, and has ordered it to remove these “zestimates” or face formal sanctions and a possible lawsuit.
But Zillow.com makes no claim that its estimates are based on actual visits to individual properties or research of their histories. Instead, the Web site gathers sale details about other homes in the same neighborhood that have recently changed hands, government tax valuations and other publicly available information, and then provides a rough prediction about a house’s value under current market conditions.
Basically, the Web site does the same research and guessing that home buyers and sellers could perform on their own, if they devoted the time and energy to do so. Of course, consumers should be cautious in relying on such Web sites precisely because even the best guesses usually will come from statistical calculations, not from first-hand knowledge of the local market or the specific property involved.
Still, instead of somehow being a threat to the public, such Web sites can be an independent, unbias source of information. If an appraiser’s work varies wildly from such projections, then buyers, sellers and mortgage leaders could be alerted to a possible mistake or to a need for a second opinion.
Given recent reports about widespread mortgage fraud and foreclosures resulting from inflated purchase appraisals, the state Board of Appraisers should be working to increase the amount of information available to consumers rather than shuttering potential sources of knowledge.
At least the Legislature appears to see the wisdom of this. On Monday, Rep. Michele Reagan, R-Scottsdale, introduced an amendment to SB1291 that was endorsed by her House colleagues to protect free opinions about property values as long as the provider doesn’t claim or imply that they are formal appraisals.
Putting Reagan’s amendment into law would be a nice endorsement of free speech and the consumer’s right to multiple sources of information.
"If an appraiser’s work varies wildly from such projections, then buyers, sellers and mortgage leaders could be alerted to a possible mistake or to a need for a second opinion"
This gentlemen is the birthplace of lender pressure and subsequent value shopping.
Arizona State Senate Bill 1291, as amended to assure the legality of consumer-oriented Automated Valuation Models such as that used by Zillow.com, passed the Arizona House on 4-30-2007 by a vote of 52-3, with five members not voting. The bill is in front at the Senate Level now.
The amendments include language that exempts AVMs from appraisal licensing requirements under the stipulation that estimates/valuations are provided at no cost and are not called appraisals.
